Updated on Monday, October 11, 2021 – 18:37
David Card, one of the winners, argues that the increase does not “necessarily” harm employment.
David Card, one of the winners of the Nobel Prize in Economics.JEAN SMITH – UC BERKELEY PHOTO / .
The Nobel Prize in Economics this year went to the Canadian David Card, the American Joshua D Angrist and the Dutch-American Guido W. Imbens, three researchers specialized in “draw conclusions from randomized experiments“and apply them to the analysis of the labor market, according to the jury.
The Royal Swedish Academy of Sciences has valued that the winners “have shown that they can ranswer many of society’s big questions using natural experiments, situations that arise in real life that resemble random experiments, “explains the institution.
And still in the middle of the political and business battle over the interprofessional minimum wage (SMI) and unemployment, it turns out that the Nobel goes to David Card, a professor at the University of Berkeley whose analyzes say that the increase in the minimum interprofessional wage does not “necessarily” affect – it must be emphasized – the level of employment, Contrary to what many colleagues say.
To the Second Vice President and Minister of Labor, Yolanda Daz, He lacked time to go to Twitter: “Congratulations to Card, Angrist and Imbens for this well-deserved Nobel Prize in Economics. According to the jury’s decision:” Contrary to the conventional view, they showed that the increase in the minimum wage does not translate into an increase in unemployment“”, he wrote minutes after hearing the news.
Indeed, David Card, who in 2014 received the BBVA Frontiers of Knowledge Award, and the American Alan B. Krueger were the first to analyze the effects of an increase in the SMI on the ground in the United States. They did it through a comparison between the states of New Jersey and Pennsylvania. New Jersey approved raising the minimum hourly wage from $ 4.25 to $ 5.05 in 1992, while the state of Pennsylvania, neighboring New Jersey, kept the SMI at $ 4.25 per hour. Card and Krueger compared what occurred with employment in fast food restaurants (a sector that depends on low-wage workers, with more repercussions due to the increase in the SMI) in nearby cities and on the border between New Jersey and Pennsylvania.
Through surveys of restaurant managers in both states, they found that indeed the increase in the SMI led to an increase in the wages of the group of workers who had the previous minimum wage. Second, they saw no indication that the increase in the minimum wage would have a negative effect on employment. If anything, they refer to a positive effect. And the researchers also did not discover that the impact of the minimum wage on employment was observed in other types of workers.
How is it possible that, in the Spanish case, prestigious analysis institutes such as BBVA Research, AIReF or the Bank of Spain itself argue otherwise and quantify it? The Bank of Spain, for example, calculates that the 6.8% increase in the SMI decreed by the Government in 2019 caused the loss of some 170,000 jobs using the Card methodology.
The answer some economists give is that the relationship between SMI and employment depends on many variables, such as the degree of liberalization of the labor market, the competition that exists between companies, and the magnitude of the increase in wages. In fact, research subsequent to Card’s has influenced this last piece of information. American professors Dale Belman and Paul J. Wolfson, experts also on the labor market, concluded in 2014 that the “evidence leads us to conclude that the iModerate increases in the minimum wage they are a useful tool for raising incomes at the bottom of the distribution with little or no negative impact on employment. “. Another research by Christopher Flinn, author of the book ‘The Minimum Wage and Labor Market Outcomes’ concludes that “small changes in the minimum wage do not have significant impacts in labor results “.
In fact, the Nobel jury’s own statement highlights that Card’s investigations reveal that “the increase in the minimum wage does not translate into necessarily in less employment. ”
For their part, Angrist, from MIT and Imbens, from Stanford University, have shown “the conclusions about cause and effect that can be drawn from natural experiments.” “The framework developed by both has been widely adopted by researchers working with observational data, “states the Academy.
According to the criteria of
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